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» Oregon rank: 14 90+ Day Delinquency Rate Foreclosure Rate June 2013 1.8% Unemployment Rate 3.1% 7.9% year ago 2.1% 3.5% 8.8% year-over-year change -14.7% -11.9% -10.2% Top County 90+ Day Delinquency Rate CrOOk COunTy Foreclosure Rate June 2013 2.0% 6.5% year ago 2.2% 7.5% year-over-year change -9.9% -13.5% Top Core-Based Statistical Area Prineville, Or 90+ Day Delinquency Rate Foreclosure Rate June 2013 2.0% 6.5% year ago 2.2% 7.5% year-over-year change -9.9% -13.5% note: The 90+ day delinquecy rate is the percentage of outstanding mortgage loans that are seriously delinquent. The foreclosure rate is the percentage of outstanding mortgage loans currently in foreclosure. State rank is based on the June 2013 foreclosure rate. All figures are rounded to the nearest decimal. The unemployment rate reflects preliminary June 2013 figures released by the Bureau of Labor Statistics. All other data courtesy of LPS Applied Analytics. IN THE NEWS Oregon Legislature Amends Foreclosure Mediation Law to Overhaul Program The Oregon Foreclosure Avoidance Mediation Program stopped accepting new cases on August 4. The state-run program had been in effect since July 11, 2012, and operated under Senate Bill 1552. The legislation was intended to bring delinquent homeowners and lenders together with a mediator to come to a mutually agreeable resolution for nonpayment of mortgage debt. In an op-ed published in Oregon's Statesman-Journal last month, Attorney General Ellen Rosenblum described the program as "disappointing in the first year, due largely to the unilateral decision by many of the largest banks not to participate." According to local media reports, during the first eight months of the state mediation program, only eight mediation sessions took place. Under SB 1552, only non-judicial foreclosures were subject to the new mediation requirement, and HouseKeepingReport.com, which covers Oregon mortgage and foreclosure news, says following the bill's passage, most foreclosures shifted to the courts with non-judicial foreclosures virtually grinding to a halt. To close the legislation's judicial loophole, state lawmakers introduced Senate Bill 558 in February, which establishes the Oregon Foreclosure Mediation Program (same name as before sans "Avoidance"). It passed the legislature in late May, and Gov. John Kitzhaber signed the bill into law on June 4, making it effective as of August 4. SB 558 makes all foreclosures by major banks subject to the mediation requirement. Only banks that submit a sworn affidavit to the attorney general stating they initiated fewer than 175 residential foreclosure actions during the preceding calendar year are exempt from the mediation statute. The new law simplifies notice requirements. Lenders must issue a request for a resolution conference to the mediation administrator before commencing a foreclosure action—judicial or non-judicial. Within 10 days, the administrator sets the date for a mediation conference and sends a scheduling notice to the lender and homeowner. Documentation requirements are also streamlined under SB 558. And if the lender satisfies all requirements outlined in SB 558, a certificate of compliance is issued, allowing the lender to foreclose with no additional interference, provided no agreement to bring the mortgage current was reached. "Oregon banks deserve credit for not fighting the legislature's recent overhaul of the mediation program," Attorney General Rosenblum wrote in the Statesman-Journal. "I take that as a sign they have every intention of . . . cooperating fully. Together, we can reduce foreclosures and make Oregon's mediation program a win-win for homeowners, the industry, and Oregon's economy." FROM THE BENCH Tips for Servicers When Dealing with Code Violations in Oregon One of the more vexing problems for servicers' asset preservation departments are municipal code violations and the often soaring fines arising from the condition of properties. To make matters worse, such VISIT US ONLINE @ DSNEWS.COM violation notices might reach the servicer late, sometimes after a deadline or a hearing due to the notice being forwarded from other entities in the chain of title or sometimes because the city misunderstood the proper entity to serve. Compounding this problem more recently is that many foreclosures in Oregon, for example, have been delayed, despite borrowers' payment default as a result of legal developments over the past couple of years in Oregon that had limited the availability of the faster non-judicial foreclosure method. As a result, many alleged code violations have accrued unabated for a longer timeframe while borrowers have remained in default. To mitigate costs and damages associated with code violations, a servicer should first, upon receipt of a notice, identify whether the property is owned outright by the beneficiary in REO following its foreclosure or if the property is still owned by the borrower and the beneficiary simply has a mortgage or trust deed lien against the property. If the servicer receives notice of a lien against a property for assessments related to nuisances or an unsafe structure, it should first consider consulting with local counsel on whether the lien has priority over the first mortgage. Certain municipal liens in Oregon, if recorded in the city's lien system (which might not necessarily appear on a title report), have priority over an otherwise first position mortgage/trust deed. This situation often presents a dilemma because the beneficiary does not own the property, yet it is arguably expected to mitigate the nuisance or allegedly unsafe structure. The language in some mortgages permits the beneficiary to enter the property and take remedial action in limited circumstances or pay liens that may attain priority with advance notice to the borrower. However, beneficiaries must be extremely cautious prior to doing so, as borrower lawsuits for property trespass and improper loan charges are not uncommon and can be quite costly as well as carry media risk. In some cases, the beneficiary may consider filing a lawsuit to obtain formal court permission to enter the property before the foreclosure is completed if confronted with a particularly high-risk situation. Once the beneficiary owns the property in REO following the foreclosure sale, it is responsible for maintaining the property free of code violations. Some municipalities will agree to reduce or waive any fines for a negotiated timeframe if the servicer agrees that it will market and sell the property within a certain timeframe and inform the buyer of 135

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